Small banks help Iran slowly restore foreign financial ties

Iran is gradually restoring banking links with the rest of the world by forging ties with smaller foreign institutions, even though large global banks are still holding back because of legal risks, Iranian officials and foreign bankers say.

Since international sanctions over Iran’s nuclear programme were lifted in January, the world’s big banks have continued to stay away because they fear being penalised by remaining U.S. sanctions over issues such as money laundering. This has slowed Iran’s efforts to rebuild its foreign trade and lure investment.

But in the last few weeks, the officials and bankers say, Tehran has begun making a dent in its financial isolation by forging banking channels via small institutions, many of which do little or no business in the United States and so feel less legally exposed when they engage with Iran.

“Two hundred small and medium-sized international banks have started correspondent relationships with Iranian banks,” Iran’s central bank said in an emailed response to questions by Reuters. (full article)